What a useful million kilocalories of industrial heat costs in India, fuel by fuel
The cheapest fuel is not the cheapest heat. Three things together set what a useful million kilocalories costs in an Indian factory. They are the price of the fuel, its calorific value, and the efficiency of the equipment that burns it. Across the fuels an Indian plant can buy in August 2026, the most expensive delivered heat costs more than six times the cheapest. The ranking is not the one most plants assume.
Light diesel oil delivers a useful million kilocalories at about ₹14,623 and industrial PNG in Gujarat at about ₹8,421, using the prices below. A heat pump at a coefficient of performance of 3.5 on the Maharashtra HT-I tariff delivers the same heat for about ₹2,804. The full calculation is below, with every price, calorific value and equipment efficiency stated, so you can rebuild it against your own invoice.
How do you convert a fuel price into a cost of heat?
The method has four steps, and every table below repeats them.
- Start with the price per unit as you actually buy it. Rupees per SCM for gas, per kilogram or litre for oil, per tonne for solid fuel, per kWh for electricity.
- Divide by the calorific value per unit. That gives a cost per kilocalorie of energy going in.
- Divide by the efficiency of the equipment. That converts input energy to useful energy delivered to your process, and it is the step most comparisons skip.
- Convert at 1 kWh equals 860 kcal if you want the answer per kilowatt-hour thermal.
Here it is worked once, on Gujarat industrial PNG. The gas costs ₹68 per SCM at 9,500 kcal per SCM, burned in a boiler at 85% efficiency.
- ₹68 ÷ 9,500 = ₹0.00716 per kcal of input
- ÷ 0.85 = ₹0.00842 per useful kcal
- × 1,000,000 = ₹8,421 per useful million kilocalories
- ÷ 860 × 1 = ₹7.24 per useful kWh thermal
That is the whole method. Every row in every table on this page uses it and nothing else.
The assumptions behind every row
| Input | Value |
|---|---|
| Energy conversion | 1 kWh = 860 kcal |
| Natural gas calorific value | 9,500 kcal per SCM, gross |
| Furnace oil calorific value | 10,050 kcal per kg |
| Coal calorific value | 3,800 kcal per kg |
| Light diesel oil calorific value | 10,700 kcal per kg, indicative |
| Biomass briquette calorific value | 4,000 kcal per kg, indicative |
| Gas boiler efficiency | 85% on gross calorific value |
| Oil boiler efficiency | 80% |
| Solid fuel boiler efficiency | 70 to 72% |
| Electric resistance efficiency | 97% |
Change any of these to your own measured values and the answer moves.
What does each fuel cost per useful million kilocalories?
The table uses August 2026 prices, ranked from the most expensive delivered heat to the cheapest.
| Heat source | Assumed price and date | Cost per useful Mkcal | Per useful kWh thermal |
|---|---|---|---|
| PNG at the crisis peak | ₹119 per SCM | ₹14,737 | ₹12.67 |
| Light diesel oil | ₹107.65 per litre, 1 Aug 2026 | ₹14,623 | ₹12.58 |
| Electric resistance, Maharashtra HT-I | ₹8.44 per kVAh | ₹10,117 | ₹8.70 |
| PNG, Morbi ceramic cluster | ₹75 per SCM, Jun 2026 | ₹9,288 | ₹7.99 |
| Furnace oil | ₹71.99 per kg, 1 Aug 2026, Visakhapatnam depot | ₹8,954 | ₹7.70 |
| PNG, Gujarat general industrial | ₹68 per SCM, Jun 2026 | ₹8,421 | ₹7.24 |
| PNG, Morbi pre-crisis | ₹41.60 per SCM | ₹5,152 | ₹4.43 |
| Heat pump at COP 2.5, Maharashtra HT-I | ₹8.44 per kVAh | ₹3,926 | ₹3.38 |
| Heat pump at COP 3.0, Maharashtra HT-I | ₹8.44 per kVAh | ₹3,271 | ₹2.81 |
| Biomass briquette | about ₹8,500 per tonne, 2026 | ₹2,951 | ₹2.54 |
| Heat pump at COP 3.5, Maharashtra HT-I | ₹8.44 per kVAh | ₹2,804 | ₹2.41 |
| Heat pump at COP 3.5, Karnataka HT-2(a) | ₹7.05 per kWh | ₹2,342 | ₹2.01 |
| Coal, delivered | ₹6,000 per tonne | ₹2,256 | ₹1.94 |
Light diesel oil at ₹14,623 against delivered coal at ₹2,256 is a factor of 6.5 across the same delivered heat. A plant that switches from LDO to gas has done more for its heat cost than most efficiency projects ever will. A plant on coal is already at the cheap end, and has other reasons to move.
Note what the table does not say. It says nothing about capital cost, and therefore nothing about payback. It is an operating cost comparison. To get from here to payback, divide the quotation you are holding by the annual saving this table lets you compute. That works with our quotation and with anybody else’s.
What does a tonne of steam cost?
This is the same arithmetic, in the unit a boiler house uses.
One tonne per hour of saturated steam is approximately 583 kW thermal. The figure comes from 1,000 kg per hour at roughly 2,100 kJ per kg of enthalpy rise. That conversion is our own arithmetic. Use it as an approximation for sizing.
Multiply your cost per useful kWh thermal by approximately 583 and you have the cost of an hour at one tonne per hour.
| Heat source | Per useful kWh thermal | Approximate cost per tonne of steam |
|---|---|---|
| Light diesel oil | ₹12.58 | about ₹7,340 |
| Electric resistance | ₹8.70 | about ₹5,070 |
| Furnace oil | ₹7.70 | about ₹4,490 |
| PNG, Gujarat industrial | ₹7.24 | about ₹4,220 |
| Biomass briquette | ₹2.54 | about ₹1,480 |
| Coal, delivered | ₹1.94 | about ₹1,130 |
This table has no heat pump rows. A heat pump delivers hot water, so a cost per tonne of steam would compare two different products. Where a heat pump is relevant is in taking duties off the steam header that never needed steam, and that conversion is covered here.
Why is the gas price in the news not the gas price on your bill?
The published number is a household rate, and yours is an industrial one.
Consumer aggregators publish domestic PNG at around ₹51.50 per SCM in Mumbai and ₹46.82 to ₹55.79 per SCM in Gujarat. Those are household rates. Industrial PNG is a different, contract-specific and materially higher number. The verified Gujarat industrial figure is ₹68 per SCM as of June 2026.
The reason is how the gas is allocated. Administered-price domestic gas is directed to CNG and household PNG as priority segments. Industrial supply comes from imported LNG, which is why the industrial rate tracks the Asian spot benchmark. Asian spot LNG was USD 21.38 per MMBtu on 31 July 2026. A headline about domestic gas prices falling is about a different product from the one in your boiler.
A cost model built on the domestic figure understates the incumbent fuel cost. It therefore understates the saving from replacing it. Either way, a comparison built on the wrong input is worthless to both sides.
What does electricity actually cost, by state?
Energy charge, demand charge and the landed number are three different things and comparing states on the first alone misleads.
| State and licensee | Category | Energy charge | Demand charge | Landed |
|---|---|---|---|---|
| Maharashtra, MSEDCL | HT-I | ₹8.44 per kVAh | ₹650 per kVA per month | Add duty and any time-of-day adjustment |
| Gujarat, GUVNL | HT-I | ₹4.30 per unit | Not separately verified | ₹7.50 to ₹8.50 all-in |
| Tamil Nadu, TANGEDCO | HT industrial | ₹7.50 per kWh | ₹608 per kVA per month | Plus 5 percent electricity tax |
| Karnataka, BESCOM and the other ESCOMs | HT-2(a) | ₹6.70 per unit plus 35 paise surcharge | ₹365 per kVA per month | About ₹7.05 before duty |
| Uttar Pradesh, UPPCL | LMV-6, Small and Medium Power | ₹9.02 per unit average billing rate | Not verified | Already all-in |
Two rows carry conditions. The Uttar Pradesh figure is LMV-6, a small and medium power category. Do not read it as what a large plant pays. Maharashtra bills HT-I per kVAh, not per kWh. So a plant with poor power factor pays more per useful kilowatt-hour than ₹8.44 suggests.
Maharashtra also holds the most useful forward number on the page. The regulator has approved a decline from ₹8.44 per kVAh in FY2026-27 to ₹7.45 by FY2029-30. The operating cost of an electric heating asset is on a published downward track in that state while the gas price tracks an imported commodity.
If open access or captive solar is on the table, two Gujarat charges decide whether it pays. The first is a cross-subsidy surcharge for FY2026-27, at ₹1.33 per kWh. The second is wheeling at ₹0.2352 per unit, at a 6.5 percent loss. Those sit on top of whatever generation rate you are quoted.
At what efficiency does a heat pump break even against my fuel?
Breakeven COP is the electricity price per kWh divided by the fuel’s cost per useful kWh thermal. Below it the heat pump loses; above it, every point of COP is margin.
| Incumbent fuel | Maharashtra ₹8.44 | Gujarat ₹8.00 | Karnataka ₹7.05 |
|---|---|---|---|
| PNG ₹75 per SCM, Morbi | 1.06 | 1.00 | 0.88 |
| PNG ₹68 per SCM, Gujarat | 1.17 | 1.10 | 0.97 |
| Furnace oil ₹71.99 per kg | 1.10 | 1.04 | 0.92 |
| LDO ₹107.65 per litre | 0.67 | 0.64 | 0.56 |
| PNG ₹41.60 per SCM, pre-crisis | 1.90 | 1.81 | 1.59 |
| Biomass briquette ₹8,500 per tonne | 3.33 | 3.15 | 2.78 |
| Coal delivered ₹6,000 per tonne | 4.35 | 4.12 | 3.63 |
| Coal delivered ₹4,000 per tonne | 6.53 | 6.19 | 5.45 |
Read that grid as three separate markets.
Gas, furnace oil and LDO break even at COP 0.6 to 1.2. Any functioning machine beats them, and there is no sensitivity analysis to lose. This is where the case is not close.
Pre-crisis gas breaks even at 1.6 to 1.9, which a heat pump comfortably beats. So a return to pre-crisis gas prices does not break the case.
Coal and biomass break even at 2.8 to 6.5, which a 120°C machine cannot reach. Against solid fuel, the reasons to switch are compliance, air quality, labour and customer audits.
How much will I save?
No single number answers that question.
The saving is a function of the coefficient of performance achieved, and the COP is a function of the output temperature. So there are two axes, and both have to be answered.
On the fuel axis, at COP 3.5 on the Maharashtra tariff:
| Fuel displaced | Saving |
|---|---|
| PNG at the crisis peak | 81% |
| Furnace oil | 69% |
| PNG, today’s Gujarat industrial | 67% |
| PNG, pre-crisis | 46% |
| Biomass briquette | 5% |
| Coal, delivered | minus 24%, the heat pump loses |
On the temperature axis, a COP near 3.5 is plausible at a 60 to 70°C duty, and the 67% figure holds there. At a 120°C duty, measured Indian performance is nearer 2.0 to 2.26, and the saving falls with it. At COP 2.5 against today’s gas, the saving is around 53%.
So “how much will I save” always comes back to two questions: which fuel you are displacing, and at what output temperature.
The 46% row is the saving against pre-crisis gas. So the business case survives a return to pre-crisis prices. A case that rests only on the 2026 disruption would expire when prices ease.
What if gas comes back down?
The margin narrows and it does not invert.
The acute phase of the price disruption has passed. The price has settled on a higher plateau and has not returned to where it was. Morbi industrial PNG was ₹44.68 per SCM in July 2024 and ₹75 in June 2026, and the Gujarat general industrial rate is ₹68. Those numbers are the new floor.
A capital decision should be taken against the plateau, not against the spike. Run your case at ₹41.60 per SCM, the pre-crisis Morbi rate, and see whether it still clears your hurdle. On the grid above, that is a breakeven of 1.6 to 1.9, and at COP 3.5 the saving is still 46%. If the project works at that price, it works.
Where the numbers come from
Every fuel price above carries its date in the table. The electricity tariffs are the published state schedules for FY2026-27. The cost-per-useful-heat column is our own calculation from the assumptions block.
Four figures are missing or approximate:
- There is no LPG or propane row. No 2026 industrial price for either was available.
- Delivered coal is an assumption. In June 2026, the pithead notified price for non-coking G13 coal was ₹1,849 per tonne. Delivered cost is materially higher, and the table runs coal at ₹6,000 per tonne delivered. The pithead price is not a factory-gate cost.
- Light diesel oil and biomass briquette calorific values are indicative, at 10,700 and 4,000 kcal per kg. Those two rows are directional.
- There is no Maharashtra industrial PNG row. The gas rows are Gujarat and Morbi.
What to do with this
Rebuild the one row that applies to you, from your own invoice. Take the price you actually pay. Use your fuel’s calorific value if you have a certificate for it. Use your boiler’s measured efficiency if you have a test. With three numbers and one division each, you have your real cost of heat.
Then take your landed electricity tariff and divide. If the result is below the COP you can hold at your output temperature, a heat pump is cheaper to run on that duty.
The calculator does that arithmetic and the method behind it is here. The comparison against each specific boiler type is in heat pump versus boiler running costs. What an electrical connection adds on the capital side is covered under sanctioned load. When you have your own numbers, send them to us.
Frequently asked questions
- How do you convert a fuel price into a cost of heat?
- Divide the price per unit by the calorific value per unit to get a cost per kilocalorie of input. Then divide by the efficiency of the equipment that burns it to get a cost per useful kilocalorie. Convert at 1 kWh equals 860 kcal where you want the answer per kilowatt-hour. Every row on this page uses that and nothing else.
- Why is the gas price in the news not the gas price on my bill?
- Because published aggregator rates are domestic household PNG. Industrial PNG is contract-specific, unpublished and materially higher. Verified Gujarat industrial PNG is around ₹68 per SCM, against a state domestic rate in the ₹46 to ₹56 band. Administered domestic gas is allocated to CNG and household PNG as priority segments, so industrial supply tracks imported LNG instead.
- What does a tonne of steam cost?
- Multiply your cost per useful kWh thermal by approximately 583, because one tonne per hour of saturated steam is approximately 583 kW thermal. That conversion is our own arithmetic, from 1,000 kg per hour at roughly 2,100 kJ per kg of enthalpy rise. Treat it as an approximation for sizing.
- At what efficiency does a heat pump break even against my fuel?
- Divide your electricity price per kWh by your fuel's cost per useful kWh thermal. Against gas, furnace oil and light diesel oil that lands at 0.6 to 1.2, which any working machine clears. Against biomass and coal it lands at 2.8 to 6.5, which a 120°C machine cannot reach.
- How much will a heat pump actually save me?
- There is no single figure, because the saving depends on which fuel you are displacing and at what output temperature. At COP 3.5 on the Maharashtra tariff it is about 67% against today's gas and 69% against furnace oil. At a 120°C duty the achievable COP is nearer 2.0 to 2.26, and at COP 2.5 against today's gas the saving is around 53%. Against delivered coal the heat pump costs about 24% more to run.